Business continuity risks associated with operational failure, information
systems and data security
A failure of our systems, or a failure of our operational and company
management processes, could lead to a loss of client confidence in and
satisfaction with Logica which would undermine our market perception, our
brand, and as a result, the leading position we enjoy in many markets today.
Standardisation of processes, systems and tools through the One Logica
programme (see pages 14 to 15) is improving operational effectiveness and
should allow us to react more rapidly than in the past in the event of a
failure. Our delivery and account teams understand the processes to follow,
should we become aware of or a client alerts us to a problem. Our goal is
always ensuring we know how to respond to address client concerns early and
preserve our relationships with them and their satisfaction with us over the
longer term.
Dependence on recruitment and retention of suitably qualified personnel
Our ability to meet the demands of the market and compete effectively with
other IT suppliers is, to a large extent, dependent on the skills, experience
and performance of our people as well as on an appropriate balance of onshore,
nearshore and off shore resources. Attrition, our nearshore and off shore
headcount and employee satisfaction all remain key performance indicators as
the long-term sustainability of our business relies heavily on motivated and
inspired people who feel part of a long-term future to deliver value to our
clients. See pages 136 to 137 for a description of the KPIs.
While we maintained well established recruitment processes, the absolute level
of recruitment declined and attrition slowed in 2009, making it easier to
retain people. Nevertheless, we recognise slowing attrition will reverse as the
economy recovers. The recently unveiled employee value proposition encourages
our people to `shape the future' for themselves and our clients, supported by
inspirational leadership, talent development (including the Logica University),
the right incentives and strategic resourcing to facilitate making sure we have
the right people in the right places. At senior levels of the Company, we also
have reviewed our incentives (see page 59) and have a clear succession planning
process.
Achieving operational process excellence in our global blended delivery model
The market is increasingly demanding the ability to deliver globally. With 45%
of our opportunities in 2009 requiring a blend of onshore and off shore work.
An inability to demonstrate process excellence in a timely manner would result
in lower win rates and lower order intake at the bidding stage and lower
revenue once in the delivery stage over the longer term.
We are industrialising our processes, supported by common management systems.
We are adopting common service management tools and processes known as ITIL
service management (ITSM) for all our Outsourcing business. These steps are
further strengthening our ability to deliver services and application
management on a global basis from any delivery centre, giving us greater
flexibility to manage issues.
Loss of authorisation or accreditation from vendors or disruption of key
supplier relationships
A portion of Logica's revenue is dependent on continued authorisation and
accreditation by certain vendors of IT software and hardware, such as SAP and
Oracle. Without these service authorisations and accreditations, we would be
unable to offer certain products and services. Failure to maintain
authorisations and accreditations could also mean being unable to fulfil
contractual obligations.
Alliance management is tasked with developing engagement plans with key
suppliers that link Logica to these organisations at management levels and
across functions, maintaining a mutually positive and beneficial business
arrangement.
Regulatory compliance risks
Compliance risks need to be effectively understood and managed. Our main risk
areas are: 1) data and information security, including Data Protection
regulations, 2) environmental standards and Corporate Responsibility and 3)
global staff mobility issues including adherence to immigration and tax
regulations.
We proactively monitor the complete breadth of compliance requirements across
the individual geographies and regulatory domains. Formal risk assessments
identify specific mitigating actions required. Standard governance processes
are being implemented across the Group.
Business continuity risks associated with a pandemic, terrorist incident or
other external event, including exposure to geopolitical, economic and social
disruption, particularly in parts of Europe and in India
Continental or global influenza or related virus pandemic and terrorist attacks
continue to be possible threats. Our wide geographic presence (see pages 12 to
13) also means we could be exposed to political, financial, economic and social
unrest. While generally outside our control, any of these incidents affecting a
large number of employees or a group critical to a client project could impact
our operations or our delivery against contract obligations. This could affect
client confidence in and satisfaction with Logica, with any resulting lost
business potentially affecting revenue and profitability.
Events in 2009 allowed us to assess some of the business continuity plans we
maintain in all geographies, as we reacted to the incidence of the H1N1 virus
in a number our geographies as well as to adverse snow conditions in the UK.
The investment we have made in the last few years to enable our people to work
from home paid dividends in both these situations. In 2009, we also tested our
local plans against a range of disaster scenarios. Our balanced business and
market portfolio and our flexibility in cutting costs also provided resilience
to significant revenue declines in some of our sectors, geographies and service
lines in 2009 (see pages 19 to 33 for more detail).
Macro economic and industry level trends and changes affecting the global
competitive landscape
We are exposed to unrest in world market sectors, such as finance, oil and gas,
due to a range of factors largely outside of our control. Many market sectors
in which the Group operates have been susceptible to rapidly changing
technologies, regulation, variations in market economic conditions and
fluctuations in client demand. The Group needs to be able to continue to
respond and adapt whilst, in a timely and cost-efficient manner, continuing to
deliver existing products and services. Failure to do so will be a risk to the
Group's success.
Our balanced business and market portfolio and our flexibility in cutting costs
provided resilience to significant revenue declines in some of our sectors,
geographies and service lines in 2009 (see pages 19 to 33 for more detail). To
respond to longer term market changes, our strategic investment in sector
thought leadership and technology practices (see pages 16 to 17) is aimed at
producing innovative solution and service propositions, which should: 1) ensure
(alongside our Business Consulting) that we are seen as essential to helping
the client react to trends in their industry and 2) stimulate new client
revenue opportunities.
Achieving the objectives set for the Programme for Growth
The Programme for